The over-indebtedness rate fell by more than one percentage point to 8.86 percent.
(Photo: dpa)
Berlin The result of the “Debtors’ Atlas Germany 2021” by the credit reporting agency Creditreform is surprising: The number of over-indebted consumers in Germany fell by around 700,000 or a good ten percent to 6.16 million as of October 1st compared to the same period in the previous year .
The number of overindebted citizens fell for the third year in a row, despite the corona crisis. The overindebtedness rate, i.e. the proportion of overindebted people in relation to all adults in Germany, fell by more than one percentage point to 8.86 percent.
For the first time since the start of the evaluations in 2004, the market fell below the nine percent mark. Over-indebtedness exists when there is a high probability that the consumer will not be able to meet his obligations over a longer period of time.
However, Creditreform does not expect the positive development to continue. For many consumers, the economic situation will probably worsen in the next year and the year after that. The problem of old-age poverty is already clearly visible.
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The group of 60 to 69 year olds recorded an increase in overindebtedness cases of six percent to 769,000. Many people in the older age groups would go to work in retirement in order to raise the lack of means to secure their livelihood. The dual trend towards poverty in old age and over-indebtedness in old age “remains virulent,” warns Creditreform.
No general relaxation
The relatively good figures for the general debt situation therefore do not signal any general relaxation. Currently, 32 percent or around 13.5 million households are still affected by losses in household income, according to Stephan Villa, Managing Director of Creditreform Boniversum and Microm.
The so-called financial stress of consumers has increased and is at its highest level since May 2020. In the past twelve months, 13 percent of consumers had the feeling that their financial liabilities could “grow over their heads”. At the same time, every eighth consumer admitted to having made use of the deferral options for consumer, real estate or KfW loans. That is an increase of three percentage points compared to October 2020.
“In view of the long-lasting coronavirus situation, the astonishingly positive figures are a paradox of over-indebtedness,” said Patrick-Ludwig Hantzsch, Head of Economic Research at Creditreform, on the figures. State aid measures such as short-time working allowances and bridging aid for companies gave companies massive support and thus also jobs.
The wealth barometer of the German Savings Banks and Giro Association (DSGV) already gave the impression that the pandemic had a far less dramatic impact than expected on the financial situation of consumers. According to this, 43 percent of people rated their financial situation as good or very good. That corresponded to the status of 2019 – i.e. from before Corona. The proportion of those who rated their own situation as bad or rather bad rose by just one percentage point.
However, the German citizens also took precautions. If the savings rate, i.e. the proportion of disposable income that was saved, was between nine and eleven percent in the past few years, according to DSGV 2020 it rose to 16 percent and has now even reached 19 percent. Creditreform suspects that large parts of this sum were used to repay existing debts.
Personal bankruptcies are increasing
At first glance, the development of private bankruptcies does not quite fit in with the debt situation of German citizens. In the first half of 2021, personal bankruptcies in Germany increased by around 50 percent to just under 58,000 compared to the same period in the previous year, reported the Crifbürgel credit agency. And the trend intensified in July 2021.
“Our forecasts are currently of up to 120,000 personal bankruptcies in 2021,” said Crifbürgel managing director Frank Schlein. That would be more than doubling compared to the previous year. Previously, the number of personal bankruptcies had been declining for ten years.
This dramatic increase is mainly due to the reform of consumer insolvency that came into force on October 1, 2020. This cut the residual debt discharge procedure for debtors in half to three years. Many of those affected delayed their filing for personal bankruptcy in order to benefit from the new rules, which will enable them to start a debt-free life faster.
More: Consumer bankruptcies will skyrocket in 2021.